Dear PoPville – first time home buyer programs?

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“Dear PoPville,

My boyfriend and I are long time DC residents with a strong desire to purchase a home together here in the city. As first time home buyers who earn modest incomes we are beginning to feel overwhelmed by the high cost of real estate in the District. Owning a home here seems to be out of our reach as prices continue to climb and become even more unaffordable. We would like to explore all of our options and among other things have begun researching first time home buyer programs. We are also looking into making a purchase from a DC tax sales auction for vacant property. Is there anybody who has made a purchase at an auction? Anybody with knowledge of the process that they care to share? We are in the gathering phase of our research and welcome all advice!”

73 Comment

  • You might try the Urban League. They used to have a really good first time home buyer program. They’re on 14th Street, N.W. The program consisted of classes on homebuying, home owners insurance, repairs, savings, down payments, security – tons of useful information. I went through it when I bought my house. They also give you downpayment assistance (that you have to pay back). I’m still in my house 16 years later.

    Also try Manna, Inc. They have a very similar program – they’re located near the Rhode Island Metro. They’re very, very good as well. Good luck!

  • If you make less than ~124K combined you can get assistance from the District government on downpayment/closing costs. If you have modest incomes and are first time homebuyers, I would STRONGLY recommend you stay away from auctions. First, you probably won’t have enough cash to be a competitive buyer and second, the unexpected expenses inherent to fixing vacant/abandonded property could ruin you financially.

    • can the DC opens doors progam be used for condos, or only for houses? Any particular issues using it for a condo?

      • I just used DC opens door to buy a condo and the process was extremely simple. the only restriction is on coops not condos.

      • My boyfriend and I are in a similar situation. We looked into the DC first time homebuyer program, and yes it works for condos.

  • Check out the CHIP program at BB&T. I think it stands for Community Housing Incentive Program or something similar. It’s a mortgage similar to FHA for first time buyers – it maxes out at $417k, you can put as little as 3% down (maybe even less?) and the best part is there is NO private mortgage insurance (PMI)! The interest rate you will get will be a little bit higher than market rate, but with no PMI, it is still a really good option. We used it two years ago, and they were about to put a salary cap on the program, so not sure where it stands now, but please check it out!

    We had good salaries and could shoulder a decent monthly mortgage payment, no problem. The issue was waiting around to amass a pile of money that could be a down payment on a house. We would have been waiting forever!! We were able to use CHIP – we put down 9%, got the CHIP loan for the full $417k, and bought our first house for $460k. We pay $2,300/month, which is only a bit higher than the rent we had at our old apt, and that includes home owner’s insurance and property taxes, and no PMI. We found out about CHIP from a random realtor at an open house and it was a game-changer for us.

  • Check out the DC Open Doors program, as they provide loans that require less money down (3-5%) and also have downpayment assistance programs that are forgivable something like 5 years after purchase. DC open doors locks in higher interest rates than you would get through conventional financing, but if you don’t have a ton of money to bring to closing it might be your best option.

    Also, get a real estate agent. They essentially cost you nothing (seller pays their commission) and they can walk you through all the contractual and other stuff that you just wouldn’t know unless you have been through the process before. I know that you can get all the listings and house information through redfin and zillow, but a good agent will help with market analyses, dealing with contingencies, and structuring an offer to give you your best chance to win in a competitive market. (and no, I’m not a real estate agent or a paid shill).

    Finally, move to Brentwood. We just bought a house there, and it was like the only metro accessible neighborhood that is still affordable in DC this side of the river. Well, that and Ft. Totten.

    • I would also highly recommend working with an agent, and, if you haven’t signed a contract with one yet, I would highly recommend using an agent through Redfin. When my husband and I purchased our first home in DC, we used an agent with Caldwell Banker. This time around, for both our sale and new purchase, we’re using agents from Redfin. Based on experience with the agents at Redfin, they are just as skilled and knowledgeable as the agents at your traditional agencies. However, when you’re buying, you get a percentage of their commission as a refund, which you can use towards closing costs. So you’re getting thousands of dollars towards closing costs and still getting the same benefits you get from any other agent. It’s great.

      • justinbc

        Agreed. We liked our agent through Redfin significantly more than the one that was referred by a friend. That guy didn’t do jack shit and complained when his 3% commission got cut to 2.5% by the other agent. Sorry man, you still banked 20K for passing along standard forms for us to fill out.

        • epric002

          i 3rd the recommendation for redfin. we paid for a first time home buyers class (i forget who was offering it), and it was a waste of most of a saturday. later, we went to redfin’s free home buying class which was SO much more useful than the crappy one we paid for. oh, and redfin threw in free food and drink ๐Ÿ™‚ we had a great experience buying with redfin and i’d use them again in a heartbeat.

      • I fourth Redfin. I bought and sold a house with them in the last two years and they were great. I saved about $5K on my sale and $6K on my purchase in the form of a credit which I applied toward my closing cost.

    • I echo what Paul had mentioned. I bought a few years ago for a fully finished house in Brentwood for under 250k with a yard, finished basement, 3BR/2BA, and a 10 minute walk to the metro. My mortgage is less than any basement/studio apartment east of the river.

  • houseintherear

    Are FHA loans still available? This was the only way I was able to get a house in DC. It allows for a very low down payment. But my Countrywide FHA loan was bought out by Bank of America… not sure if they even do those loans anymore because of the mortgage crisis stuff.

  • Try taking a look at DC Open Doors:

    It’s a newer program. As for the auction… it takes some organization to set up. You need to have the check on hand. So you need to be prepared to pay cash (ie: direct transfer). Full disclosure, I am a Realtor.

    Best of luck!

  • If you are familiar with the neighborhoods and prices you want to move to, I would recommend Redfin. They give you cash back at closing.

    • epric002

      +1 redfin is fabulous. and if you don’t know the neighborhoods/prices, spend a few weeks going to open houses just to learn what things cost where. that was incredibly valuable to us before we bought.

  • There are a lot of options out there. Manna was really helpful for me. They were giving out $20,000 in downpayment assistance with CityLift a while back. I’m pretty sure that’s expired though. They can walk you through the maze of options. If you’re young and don’t make a lot of money then you will qualify for a lot of programs that may have been targeted at the working poor.

    Take a look at BB&T. They have a product called the CHIP Loan. It can be 0% or 3% down depending on income. It’s a conventional loan and includes PMI in the interest rate. I think that purchasing a home with someone you aren’t married to is a risky financial decision due to the chance that you will breakup and be forced to sell the property before it has appreciated enough to make up for the transaction costs. However, because you aren’t married it may be easier to take advantage of certain loan products because you don’t need to include a spouse’s income.

    One thing to be aware of is that if you get downpayment assistance and it’s forgivable over a several years then while it’s being forgiven it counts as a 2nd mortgage. That will prevent you from obtaining a home equity loan.

    Also, checkout housing that is part of DC’s inclusionary zoning program. That’s “affordable housing” in a development that may go for 60% of area median income. That could be a salary around $55,000. Politicians may say that they are targeted at blue collar workers but they can also help young professionals. It doesn’t matter that you are 25 and likely to see significant income gains over the next few years. If your boyfriend happens to move in with you then that’s ok, I think. Use your single status and modest salary to your advantage.

  • justinbc

    Check out:

    Great resource for inexpensive housing. Most of the places need a good bit of work though, but you can get them for so low that hopefully it allows you to have a renovation budget.

  • I’d suggest staying away from the vacant homes. If this is your first time at the rodeo that is not going to work out well– even if you could get together the cash necessary to beat out the flip bidders (unlikely), the amount of risk you would assume would be enormous. You won’t find financing for this type of situation.

    Best bet? Shop around for pre-approvals from mortgage lenders. Know what you can afford, then focus your time on researching places that are in your price range (don’t waste effort looking for a deal in a neighborhood you are already priced out of– in this era of properties priced for bidding wars, you are going to be disappointed). Research up-and-coming areas that are still undervalued. Don’t automatically reject places you aren’t familiar with. Lots of people feel like they can’t afford something in the city and then miss the opportunity to buy a starter home in an area that would actually allow them to build some equity and (eventually) cash that out to get into a dream home.

    Good luck.

    • I absolutely second this.
      When I bought my first house, it was in a very rough neighborhood, but adjacent to a lot of development. It was inevitable that property value would go up as the development continued to spread in that direction. In fact, it was only a year and a half before I was able to sell at almost $200K profit and land a house in a much, much better part of town. Yes, I was pretty lucky with the timing, but it can happen and there is still opportunity if you know where to look.

  • NACA is your friend. Even with beat-up credit, you can get a loan through them with no PMI, no closing costs, and very little money down (less than 5%) because they do direct lending themselves and have some sort of special HUD non-profit designation. They’re a bit controversial, but great for responsible borrowers with limited income who want to become home owners. However, their max borrowing about is quite low for DC ($415K, I think) so you’ll need to get out of “prime” DC areas and probably can’t afford a SFH.

    • We went through NACA to purchase a cute house with a big yard near the Ft Totten metro- no money down and at a great rate. If you are willing to go through hoops, NACA’s first time buyer’s program should definitely be considered.

    • Dear God no, do NOT use NACA. Check out all these other great options outlined here and even then, I wouldn’t use them as a last resort.

      • Based on a glance at their website I’m inclined to agree with you, but can you tell us what is so bad about NACA?

      • Second the warning about NACA. I’d avoid at all cost.

      • Why not? I’m thinking about starting their program and it almost seems to good to be true.

        • “it almost seems to good to be true.”
          That’s usually enough reason for me not to do something. Still, I’m curious about why people are warning against it.

      • You probably should explain why NACA is bad.

        • There’s enough information out there for people to do their own research, but start with the requirements of their program: Monthly payments into their “neighborhood stabilization fund” above and beyond your mortgage payments and PMI; participation in a number of “actions” per year (if you like picketing banks, you’ll love this one); etc. It looks a lot like joining a cult combined with a subprime mortgage company. And that’s not even getting into the complaints that are out there.

          • No, you don’t have PMI with NACA. You only have the membership fee for ten years. We bought through them and it’s been great. They are challenging administratively (lose copies of documents, etc.) but once you have a loan with them it’s a great rate and smooth sailing.

          • You can also refinance and totally get out of the NACA “system” once you do that.
            Honestly, they sound friggin awesome. Beats paying absurd fees to big banks and mortgage brokers.
            Btw, their monthly “neighborhood stabilization” fee is only $50/month. That’s peanuts for such a cheap interest rate, no PMI, and no closing costs. You seem a bit bad at cost-benefit analysis.
            The biggest caveat with NACA is that they take a 2nd lien on your mortgage because they require you to be a owner-occupant. You’re not allowed to rent your property out without living there. You can charge rent to roommates and they do finance multi-family dwellings, but you must remain a full time resident on the property of any loan they underwrite. However, I don’t think this is a big issue for the vast majority of owners. If you want to rent it out, refinance the property and get out from NACA.

          • Some of your facts are wrong. You don’t seem very familiar with the program.

    • We bought our house (duplex) through NACA in 2008. You should be aware that NACA has a 2nd lien on the title for $25K. This lien is to ensure you continue to live in the home (or part of it). We needed to move to a different state for work and asked NACA for a lien waiver, but were denied. We were told to refinance or sell our home. Easier said than done because the balance of the loan is more than it’s current value. We also could not refinance through HARP because the loan is not owned by Freddie or Fannie. NACA also said they would allow a relative to live in our house and that would satisfy the homeowner requirement, but we don’t have family that would live in our house. Basically, we haven’t heard anything from NACA for about a year, but the lien still exists and could be enforced at any time. The bank that holds the 1st lien told us it is very unlikely that NACA would force a foreclosure because they don’t stand to collect anything until the house is worth more than the mortgage. A lawyer has suggested negotiating a lien release by offering NACA less than $25k, but we haven’t tried this route yet. Hope this helps…housing values don’t always go up and people change jobs.

  • Check out DC’s HPAP program. It all depends on it you meet the salary, and other eligibility requirements but I highly recommend looking into it. The program was temporarily suspended during the economic downturn but, the last I checked, it has been re-instituted. I bought my first home with a HPAP loan in 2008 and turned my purchase into a 50K profit earlier this year when I sold it. I feel like I should be on the cover of a HPAP success story brochure since it changed the path of my financial future, taught me so much about the homebuying process, and reminded me that – with a lot of patience – dealing with the DC government can work out in the end. ๐Ÿ™‚ Good luck to you… what an exciting time!

  • i have a question – what level of income would you need to be able to reasonable afford a 2br row house (that would be less than 300k) or it could be a condo. I feel like buying would not be significantly more than i am already paying and could rent out or have a roomate for the second room.

    • justinbc

      There are a multitude of calculators out there that can better help you get to this answer with your specific debt levels, house amount, and income. I suggest perusing, it’s a pretty good site. Finding a 2BR rowhouse for under 300K itself is going to be the bigger challenge.

    • I’m not sure where you’d find a livable row house in that range unless you like two hour commutes and/or the sound of gunshots. I think 3x income is a good rule of thumb as long as you’re otherwise debt free and can put down a decent amount (not necessarily 20%, but more than typical FHA levels). You can qualify for much more than 3x gross income, but I think it’s a really bad idea.

    • Well that will vary. If you have a 20% downpayment and excellent credit, you could get maybe a 4.5% rate. Without factoring in property tax and insurance, the payment would be about $1200 a month (for a $300K place). Depending on how much your tax and insurance is, that could add another couple hundred a month to the payment. If it’s a condo you need to factor in HOA fees. You also need to factor in things like utilities and maintenance costs, which all add up.

    • Good luck finding a 2 BR unit in a rowhouse for less than 300k. Let me know if you find one!

    • you cannot count income you might get from renting a room in a house to qualify for a mortgage. The place either needs to have a separate rentable unit with certificate of occupancy, or you need to qualify based on your own debt, income, and assets.

      I was bummed to learn that a few years ago when a 2br foreclosure was available in my building. I couldn’t make it work and I kept renting until I got married and our combined finances allowed us to buy a place.

  • First, PLEASE take steps to protect yourself given that you and Boyfriend are not (yet?) married. You need to have some kind of written agreement as to where the downpayment’s coming from, who is paying what on the mortgage and upkeep of the place, and what happens to your home equity if things go sour. I know lots of people who have bought before getting married and it’s worked out great for them – but you never want to assume anything when you’re dealing with your life savings.

    Second, don’t be in a rush to buy if you’re not sure that you can afford it right now. Make absolutely sure that you have enough of an emergency fund to handle big-ticket maintenance items (like a roof for a SFH or special assessments for a condo). Most experts who aren’t RE agents with a vested interested in getting you to buy NOW NOW NOW seem to think that prices are going to stay pretty flat in most parts of the DMV in the near future, and (for what little it’s worth since I’m NOT an expert) their reasoning seems pretty sound.

  • Will there ever be a second time homebuyer program for buyers who purchased a small (and usually rundown) house and want to move up, but keep their first home as rental property? As long as you keep trading up within DC’s borders, it sounds like a win-win for everyone, from a property tax perspective.

    • Is this a joke? If not, the answer is no. I’m not even sure what form a program like this would take, and it would surely be seen as a slap to the face of people who can’t even afford one house in DC.

    • If you need a program for that, you’re not doing it right.

    • It’s called saving your money and buying an investment property. There’s enough issues with affordability that the last thing we need is the government subsidizing a petit-rentier class.

  • Check out HPAP through DC or NACA. But prepare yourself for bureaucratic nightmares for both. I started in both, dropped NACA and still took a year to get HPAP finalized and ended up dropping that at the last minute when the DC Bond for downpayments was issued (that doesn’t happen every year). And there are actually lots of houses for under 200k in DC, they are just not going to be in the neighborhoods you are probably looking in. But good investments.

    • What were your issues with NACA and HPAP? What hoops were you having to jump through? It’s not like the conventional mortgage process through a for-profit lender is stress free and it’s way more expensive to boot.

  • I’m curious, understanding the drawback of FHA is the PMI payments you have to make in order to put 5% down instead of 20%, are there other limitations to FHA loans relating to your income? I see below their is a cap on how much you can borrow, but are you ineligible for FHA if you make over a certain amount.

    I echo the commenter above regarding the difficulty saving 20% on a condo or house in DC even when you earn a decent income. I’m a lawyer, so my income is good, but I also have a huge chunk of that that goes to Sallie Mae every month. It’s been tough scraping together 5%, much less 20%. I’d like to buy something before I’m retired and am tired of renting when my rent would cover 85% of a mortgage (or more frankly). I think my income is likely too high for some of the other programs discussed above.

    • You can put less than 20% down with a conventional loan, but you will have mortgage insurance to deal with and I think this depends on your credit. You don’t need an FHA loan to put less than 20% down. I put less than 20% down and I had 2 options for the PMI- pay the monthly premium, which is partially tax deductible, but very large and can be difficult to get get rid of even when you get to 20% equity OR finance the PMI into the mortgage rate. Because mortgage rates were so low when I bought and I have very good credit, this choice saved me a lot of money. Yes, I will be paying a higher interest rate for the life of the loan, rather than ending PMI premiums earlier, but the monthly difference is astronomical. I doubt I’ll be in my place for 30 years, so it made sense for me. And of course, all of my mortgage interest is tax deductible.

      • I’m curious though, will any conventional loan allow for only 5% down? The difference between 5% and 20% could be 25K versus 100K. That’s a pretty big spread. Looking around in NW, it’s getting tough to get anything for less than $400-500K. The idea of somehow saving $50,000 seems impossible to me. I feel like by the time I do that, I’ll need $60-75K for the same places I’d like today.

        I understand how there are worse problems to have and have tried to pose these questions without seeming oblivious to that.

  • FHA loans are a good option but just be aware that some sellers are wary of dealing with FHA buyers. A lot less down payment, FHA has more hoops to jump through which could delay the closing. most of DC is a sellers market to the point that its very easy to sell “as is” and FHA is NOT going to let you buy that. Its to protect you but it definitely makes you a lot less competitive against a multiple offer situation. And in DC, any house in a marginal to good neighborhood is likely getting multiple offers, most over asking. But I jumped through a ton of hoops 8 years ago, bought a condo and just sold it and made a shit ton of money. And yes it was in a marginal, but now hot neighborhood. its all about trade offs and being realistic about what you are willing to put up with while you live in the house. And don’t overlook some neighborhoods east of the river.

    • +1. When I sold my last house I chose the person with the second highest offer because that person had a 25% down payment versus the person with the highest offer who had a 5% down payment. Granted, the difference in the offers was only $4K. If it had been a lot more (like $50K more), I may have reconsidered. Since I got 6 offers over asking price there was pretty much no way I was going to deal with FHA loans or someone who didn’t have an “as is” clause in their offer.

    • Um what?? I used an as-is clause in my offer and I bought with an FHA loan in 2010. As long as it passes the FHA inspection, youll be fine. Meaning, if the house is livable and has a working kitchen, you are in the clear.

  • There are several DC Homebuyer programs depending on what you want out of a property. An excellent program to check out is DC Opens Doors
    Usually DC tax sales auctions for vacant property are typically for uninhabitable properties. Are you trying to do a gut job or get your hands on a shell or are you looking or a move-in-ready property?
    I am a local real estate agent and I work with a lot of first-time home buyers as well as developers who renovate uninhabitable properties. I invite you to bring your questions to my ‘Rent vs Own’ home buyer seminar next week.
    You can register at

  • CityFirst homes is great, offers downpayment assistance, the down side is that you have to split the appreciation with them when you sell

  • Thank you! Everybody has truly provided us with great information and we really appreciate it. We are now in the process of repairing our credit scores/taking steps to ensure the financial mistakes of our early 20s don’t follow us into our 30s/saving money and researching first time home buyer programs. It was great to be able to read of other’s experiences with these programs we’ve heard of but don’t have first hand knowledge of. We’re very excited to be going through this process together (ensuring we’re both protected since we aren’t yet married) and are so thankful for the information everybody shared.

    • What steps are you taking to repair your credit? I have some issues with my credit and in the process of doing some repairs (debt consolidation to pay off credit cards, removing some derrogatories from credit reports, etc).

      • Many of the same things you are doing! We started by creating accounts on It is $12.99 a month, but keeps you ‘in the know’ of anything affecting your score, any inquiries made etc. We’ve put bills on automatic payments to ensure they’re paid on time. In my case, not having any open credit cards was affecting me negatively so I did research and applied for a low risk card. It is certainly a marathon and not a sprint but it is encouraging to see progress. Good Luck!

  • I looked through all the federal and state (DC) programs when I bought two years ago. HPAP and property tax waiver is what I ended up using.

    As a cautionary note, do your own homework. These programs make things slightly more complicated and sellers and realtors may be reluctant to work with them. (At the lower end of the market you are going to be competing with buyers who have cash and want to flip properties.) In addition Urban league bungled my paperwork and I nearly lost the sale.

  • Has anybody ever combined 2 programs? As in is it possible to use DC Opens Doors and BB&T CHIP?

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